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Goldman Sachs defends $13-billion payment from AIG

The Wall Street powerhouse says money it received from the bailed-out insurer was fully justified. Critics say Goldman should have agreed to take less than it was owed.

March 21, 2009|Jim Puzzanghera and Tom Hamburger

"We owe those people that money. I mean, it's just a fact of life," Liddy said. "The result of not paying them is an event of default. And it forces the company into bankruptcy."

Critics contend that Goldman is a different case. Some have blamed the company for pushing AIG to the brink of bankruptcy in December by calling in collateral owed to it by AIG for about $10 billion in credit default swaps and other investment insurance.

Critics also claim that Goldman's gold-plated government connections helped pave the way for the massive federal bailout.

Henry M. Paulson, who was Treasury secretary last fall when the government rescued AIG, was a former Goldman chief executive. And Liddy was on Goldman's board of directors until he took the top job at AIG in September after the government received an 80% ownership stake.

Viniar repeated Goldman's assertion that its potential losses to AIG were adequately hedged. The company wouldn't have lost the money if AIG failed, he said, although the broader damage to the economy would have hurt Goldman.

"It is our responsibility to our shareholders to make sure that we are protecting ourselves. That's why we enter into these contracts," Viniar said. "All we did was call for the collateral that was due to us under the contracts. I don't think there's any guilt whatsoever."

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jim.puzzanghera@latimes.com

tom.hamburger@latimes.com

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